Equipment leasing can be a financially prudent method of procuring hospital equipment and related hospital supplies and services for hospitals and other health care related organizations. However, many medical providers enter into leasing agreements without an awareness of the all-in costs of leasing or the risks involved.
To protect themselves and secure the most favorable lease terms, medical providers need to approach the leasing of hospital equipment and related hospital supplies and services with a systematic, strategic plan for minimizing leasing risks and costs, while ensuring that the equipment needs of the enterprise are met. But leases for hospital equipment and related hospital supplies are complex, making the astute management of the leasing process a challenge.
Central role of Finance/Treasury in vendor selection and management.
Particularly for hospitals or other large health care provider organizations, leasing of hospital supplies is commonly not centralized, with individual departments often operating in "silos"--choosing and evaluating vendors and leases with little regard for corporate-level policy or consistency. In many cases, this is because there is no corporate-level policy, or at least not a policy sufficient to standardize leasing activity across all areas of the organization.
The result of this lack of central leasing control inevitably leads to contracts being signed that have avoidable and unacceptable risk. It also often means that efforts to control costs through careful vendor selection have not been followed. Without an enterprise-wide leasing policy, including best practices and centralized lease approval, there is no mechanism for enforcing lease cost containment. While various parts of the organization may make wise decisions about leasing hospital supplies, others may make costly decisions.
The solution is to centralize the leasing of hospital equipment and related hospital supplies and services within the finance/treasury department. The approval process should be standardized, including standards for lease schedule language by asset type (developed by treasury/finance). This centralization should also include performance monitoring as leases conclude, to identify opportunities to control risks and costs, as well as to evaluate vendor performance.
Implementation of company-wide best practices.
The key point that hospitals and other health care providers need to grasp is that all areas of the organization should be following the same best practices. In order to identify these best practices, the enterprise (lead by treasury/finance) needs to perform an analysis of past leasing performance, being sure to pinpoint the all-in costs of leasing; not just the sum of the rental payments.
The performance data brought to light through such an analysis of historical lease performance enables the enterprise to effectively conduct lease vs. buy analysis, to determine if leasing is in fact the best option.
